FTX’s purchase of a controlling stake in the Blockfolio crypto-portfolio management service in 2020 was 94% financed with FTT utility tokens, as Bloomberg reports.
The deal took place in August 2020. At that time it became one of the largest in the industry’s history. According to the agency, FTX acquired 52% of the company.
At the time of the announcement, it was stated that the financing comprised a combination of cash, cryptocurrencies and equity, with details undisclosed.
On December 6, 2022, the Financial Times published a table of investments by FTX and its related Alameda Research. It contained nearly 500 positions in various companies.
Blockfolio was not included in this list. The publication warned that the information presented may be incomplete.
The trigger for FTX’s collapse was statements by Binance CEO Changpeng Zhao about the intention to divest from FTT. Together with BUSD, the tokens totaling about $2.1 billion marked the exit from the portfolio investment in the exchange.
The basis for Zhao’s decision was ‘recent revelations’ that the head of Binance may have had in mind CoinDesk’s investigation. The latter showed the close entanglement of FTX and Alameda Research.
Soon after Zhao’s tweets about divesting from FTT, the token price plummeted.
Later, analysts at Nansen based on on-chain data found that about 86% of FTT (280 million of the initial issuance of 350 million) were originally controlled by the platform itself and Alameda Research. The latter served as one of the first liquidity providers for FTX in May 2019.
According to the SEC in the case against former top executives of the exchange, former head of Alameda Research Caroline Ellison ‘engaged in automated buying’ of the FTT utility token on various platforms to inflate the asset’s price.
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